Trading BTC futures that settle on the Deribit BTC index, with up to 20x leverage.

Allowance for placing volatility orders, where the Deribit price engine continuously updates the price of the order as to keep the implied volatility of the order fixed. With this feature, basic market making is already possible for any trader opening an account on the platform.

Real-time risk management with incremental auto-liquidation: If an account has a maintenance margin higher than its equity, the Deribit risk engine will liquidate its position in small steps, providing maximal protection for all parties involved. Liquidations are small and instantaneous, again ensuring fairness for everyone.

A 100BTC insurance fund to cover bankruptcies. Any bankruptcy is published in real time on the platform. Deribit aims to completely avoid socialized losses. The platform’s risk management system is built such way that it is extremely difficult to go bankrupt even if one tries to do so.

Trading via REST, Websockets API or FIX bridge. High-performance API that can handle even hundreds of requests per second from a single account.

Deribit Faces Competition

Bitcoin-based futures trading is a novel service, with Deribit being one of the first platforms to provide such vehicles. However, Crix, another bitcoin exchange that provides futures trading, stands as competition to Deribit.

Crix uses math-based analysis to manage portfolio risk, claiming that it gives traders a better chance at larger profits. “Real mathematics stands behind many aspects of trading today,” Crix founder Dmitry Koval told Bitcoinist in July. “This includes the volatility modeling and the Value at Risk method we use at our platform.”

Competition aside, Deribit said it provides trading services that cannot be found elsewhere, and is confident its zero-fee promotion will get more people to try out the platform

What do you think about bitcoin futures platforms? Have you ever traded bitcoin futures? Let us know in the comments below!

On June 20, the Bitcoin world came to a halt for some traders — twice in 24 hours, in fact — when popular Hong Kong exchange Bitfinex, owned and operated by iFinex Inc. (Bvi), unexpectedly went offline, preventing trading at the exchange for several hours.

Disclaimer: This article was provided by the Vanbex Group. Bitcoinist is not affiliated with the firms represented by the Vanbex Group and is not responsible for their products and/or services.

Bitfinex Outages Raise Important Questions

Industry-related media reported because of news regarding the outage rippling throughout the trading community, it sparked a temporary sell-off that ultimately contributed to bitcoin’s fall from the US $740 range to $685 at its lowest point.

When Bitfinex went offline the first time, which was during the afternoon, the exchange took to Twitter, stating: “Trading has been paused while we investigate an infrastructure issue,” assuring followers that “The issue does not involve funds or system security.”

Bitfinex eventually cited server migration issues and server instability as reasons for the outage of the U.S. dollar (USD) side of the exchange to eventually come back online later that night.

“The longer you are down the more people worry their coins are gone,” one Twitter user, @CamsHouseLive, responded.

His sentiment is not unfounded. Bitcoin exchanges have a history of security breaches, fraud and technical glitches with Mt. Gox setting that stage in 2014, when, as the world’s leading exchange at the time, was forced to shut down after a reported theft of 850,000 bitcoins.

Creditors are still working with bitcoin exchange Kraken in hopes of getting back money lost at Gox.

The event eventually led to the arrest of Mt. Gox CEO Mark Karpelès in 2015, with no significant developments in the case since he was charged with embezzlement.

Other well-known exchanges such as ShapeShift, Bitstamp and Cryptsy have also been victims of hacking, trading outages or stolen funds, reinforcing the notion that cryptocurrency exchanges are inherently unsafe and unstable.

However, exchanges have worked tirelessly to improve technology and security standards.

“Nobody steps away from a computer now without locking their screen,” ShapeShift CEO Erik Voorhees said in an interview with Bitcoin.com, following the highly-publicized hacks that took place in April.

“Keys and access are being much more compartmentalized, and 2-factor [authentication] is being integrated in every possible manner, among other things.”

Other exchanges have established their own precautions to protect against outside threats.

Crix.io CEO, Dmitry Koval, says that exchanges have to focus on several key aspects to make sure their customers’ funds are safe. Some of these essential areas include:

Web application security

Private key storage

Security audit procedures

Crix works to provide the best security possible, implementing “the most reliable architecture by using best-in-class technical components,” said Koval.

In addition to 10 mostly-redundant virtual servers handling different software aspects of the exchange, Crix has all of its virtual infrastructure installed at HP servers and Netapp storage.

“The equipment is resided in [a] tier 3 datacenter,” Koval explains. “Overall, the architecture is designed to withstand high loads.”

But government and regulatory oversight are also factors.

Kevin Batteh, partner at Delta Strategy Group, a full-service government affairs firm based in Washington, D.C., said he couldn’t imagine a scenario where an exchange, Bitfinex or otherwise, would self-inflict such damage.

“When running an exchange the most important thing is volume — that’s how you get paid,” said Batteh. “An exchange going down is not a good way to keep customers.”

Trust is a key part, he added. Without it, a trader is less likely to place an investment. Regulation plays a further role in this as well, as a regulated exchange affords a level of comfort to the trader.

“As a regulated institute, required systems and safeguards would be in place,” said Batteh, who referenced the Nasdaq outage in 2013.

During that particular outage, the U.S. Securities and Exchange Commission immediately inquired as to what occurred, and demanded a “blow-by-blow account of the trading disruption” from the exchanges involved and moved to determine if the failure had to do with technological standards, as was then reported by Reuters.

Of course the framework would be different for cryptocurrency exchanges and the like, said Batteh.

Koval said there is some role for government, but warns that the bitcoin exchange industry may not be able to handle the stress placed upon it by mainstream regulatory standards.

“Too heavy [a] regulatory burden can make it impossible to operate,” Koval says.

One option, though, is ensuring that exchanges are solvent, so at the very least traders can be sure that they can get their money out if their exchange goes under.

“From a regulatory perspective,” notes Koval, “monitoring the exchange’s solvency is of higher priority than setting the responsibility for technical outages at this stage.”

Koval further stressed that the market is the strongest protector of traders’ coins at the moment.

There is a market-driven balance. “If one exchange is not able to provide continuous service, traders will go to another one.”

Any financial advisor will tell you that futures trading is a risky investment decision.

Disclaimer: This article was provided by the Vanbex Group. Bitcoinist is not affiliated with the firms represented by the Vanbex Group and is not responsible for their products and/or services.

Secure Bitcoin Futures Trading With Crix

When combining futures trading with Bitcoin and digital currency exchanges with sub-par security, the risk to the trader is exponentially greater.

However, Bitcoin and digital currency futures exchange Crix.io helps mitigate both problems so customers can trade with greater trust and peace of mind.

When trading futures, there is worry over the value of your investment falling before your contract’s maturity date, which also makes it difficult to pay back any leverage you may have had with the exchange.

What’s worse is that many bitcoin exchanges don’t have stop-loss measures in place, which have led to large rounds of margin calling, producing intense “flash crashes” in the bitcoin price.

Dmitry Koval, founder of Crix, said in a previous interview that the shorter contract term — three hours, 24 hours — is the “trade-off for totally mitigated slippage risk and full transparency of all the calculations.”

Prices throughout the session, whether for a three hour or 24-hour contract, are limited to model-predicted limits so a trader cannot place an order priced outside of these limits, said Koval.

“Therefore, none of the traders can lose more than their initial collateral during the session.”

But there is also the threat of hacking and security breaches.

Theft is unfortunately a common occurrence on bitcoin exchanges, so much so that it has significantly influenced negative perceptions of Bitcoin.

Mt. Gox, for example, suffered a security breach in which 850,000 bitcoins suddenly vanished from the exchange’s coffers in 2014.

Being the largest bitcoin exchange in the world at the time, Mt. Gox’s breach was plastered all over mainstream media, painting Bitcoin as an insecure, criminal hot-spot.

In the years since, other exchanges have also been hacked due to weak security, resulting in untold losses. This is a turn-off for a segment of investors and traders, especially those on the fringes just considering whether to get into the cryptocurrency space.

Recognizing these risks, Crix made an effort to create a bitcoin futures platform as secure as possible.

Using sophisticated security architecture, a proprietary algorithm for private key storage, as well as cold storage and virtualized key servers, Crix offers a storage solution that makes potential attackers unable to locate private keys to any bitcoin wallet.

To protect its website from DDoS attacks, Crix uses CloudFlare combined with firewall functionality. The exchange also safeguards data passing through its website with SSL encryption.

Security solutions from Arbor Networks and F5 Networks further secure the overall platform. Additionally, Crix says that all “software components are virtualized,” and that “hardware is hosted at a Tier 3 data center,” with “extremely high levels of availability.”

To ensure everything was truly in order, Crix enlisted the services of Cobalt, a San Francisco-based online security firm, to test their infrastructure’s protection against vulnerabilities.

Cobalt COO Jakob Storm said, “The penetration test confirmed that Crix.io … had good security controls in place [and] … No high severity vulnerabilities were identified.”

The security team also noted, it was evident the platform’s application was written by a team with security expertise.

After passing the audit, Storm said that Crix “initiated a bug bounty program” to ensure the longevity of their security measures. “A bug bounty program is a great way to continuously get exposure from skilled researchers,” noted Storm.

“A live application is a very dynamic thing,” Storm said, “it changes over time when the new features are introduced and environments are updated.”

Concluding, Storm remarked, “A general recommendation is to do, minimum, two [penetration] tests per year per application.”

While it’s impossible to fully eliminate the financial risk exposure of futures trading, the Crix platform is a start. With its Cobalt-verified security, model predicted limits and transparent protocol, the digital currency exchange and futures contract platform is one of the most accessible and secure environment investors and traders can enjoy on the market today.

Dmitry Koval, founder of Crix.io, a cryptocurrency trading platform, said in a recent interview: “Our mission is to contribute to the community and ecosystem by creating the best niche products such as exchange-traded futures contracts suitable for hedging and high-leveraged trading.”

Disclaimer: This article was provided by the Vanbex Group. Bitcoinist is not affiliated with the firms represented by the Vanbex Group and is not responsible for their products and/or services.

Mathematical Bitcoin Trading With Crix

Crix

In the cryptocurrency world, where volatility can swing at even circumspect news, precision and probability must co-mingle. To gather a behavioral understanding of cryptocurrencies — to discern its movement within a probabilistic range — requires a significant degree of analytical depth predicated on vital access to historical information.

“Real mathematics stands behind many aspects of trading today. This includes the volatility modelling and the Value at Risk method we use at our platform,” said Koval.

At Crix they analyse hundreds of time periods back to then help determine the end of the next period within a certain range and probability. Like the guess of a coin-flip, understanding the percentages are a guide to making an educated assessment.

“With bitcoin, it is way more complex, but the principle is the same,” said Koval, adding, “We use a two-stage approach to determine price limits.”

In the first stage, the historical volatility of the BTC/USD market is assessed to find the mathematical function that best corresponds to the volatility data. The information is then calibrated based on the historical data sample.

Next, a Value at Risk analysis is run on the out-of-sample historical data set in order to predict a single-period price range within a given accuracy.

“Both volatility modelling and VaR techniques are widely used these days for portfolio risk management on different markets,” said Koval.

Of the cryptocurrency varieties Crix does support — Bitcoin, Litecoin, Dash, Namecoin, Doge, Peercoin and Nextcoin — there is a noticeable gap, however, ether.

Koval said, “We are going to open ETH to BTC trading at our spot section in the nearest time. We are going to introduce futures contracts as well.”

The only challenge for futures contracts is the historical data, explained Koval.

“We need 500 to 1,000 periods back to get good results for the model.”

Crix’s flagship product is its futures platform. Most efforts in development and marketing, according to Koval, go toward this part of Crix’ trading system.

However, the Crix platform also offers a spot section where users can locate benchmark prices on alternative coins (altcoins), allowing people to exchange them to bitcoins and trade futures collateralised in bitcoins without a need to use another provider.

It’s simple, convenient and honest.

“The shorter contract term at Crix (three hours, 24 hours) is the trade-off for totally mitigated slippage risk and full transparency of all the calculations,” said Koval.

“We don’t have any proprietary parameters which are changing throughout the session and therefore, no manipulation is possible by design.”

Crix.io is a cryptocurrency trading platform under the Crix Software umbrella and was founded by Dmitry Koval in 2014.

Disclaimer: This article was provided by the Vanbex Group. Bitcoinist is not affiliated with the firms represented by the Vanbex Group and is not responsible for their products and/or servces.

Crix: Niche Products for Bitcoiners

“Our mission,” said Koval, “is to contribute to the community and ecosystem by creating the best niche products such as exchange-traded futures contracts suitable for hedging and high-leveraged trading.”

Crix’s development is focused on three pillars: simplicity, security and performance.

The system provides traders with a simple user interface and transparent trading rules.

“At the same time, as all our derivatives are collateralised and settled in bitcoins, we are able to maintain anonymity of the traders which is an important value for the community,” said Koval.

Crix’ mathematical model is based on volatility modelling and Value at Risk (VaR) calculations derives the margin requirements for traders so that the probability of loss is very small — normally less than 1% according to Koval.

“In bitcoin those mechanisms do not work because of the anonymous nature of the system. Therefore the future contract terms and leverage allowance should be carefully tuned to provide the maximum protection for traders involved,” said Koval.

Crix’ mathematical model appears the best predictive platform, using the latest calculation method, VaR, to ensure fair settlement regardless of liquidity or volatility — two defining characteristics of cryptocurrencies today.

Crix is currently reviewing several models of business: a standalone futures exchange, powering an existing spot exchange with our technologies coupled with running the educational trading platform to provide futures trading simulations, and even organise traders and trading bots competitions.